NEW YORK, USA - U.S. stocks fell for a third straight day on Friday as investors took weaker-than-expected results from computer maker Dell (DELL.O) and homebuilder D.R. Horton (DHI.N) as a further sign that the recovery would be anemic.

Following the S&P 500's gain of more than 60 per cent from its 12-year closing low of March 9, investors have become more sensitive to signs of weakness as they sought to justify lofty share valuations.

"While it appears to us that the recession is over, there are a lot of lingering signs of pain on Main Street," said Sasha Kostadinov, portfolio manager and research analyst at Shaker Investments in Cleveland, Ohio. "Unemployment is very high, lots of people out of work and that is still causing significant stress."

The news of a 54 per cent slide in Dell's quarterly profit rounded off a rocky week for the technology sector, which has been a market darling since March as investors bet on a strong recovery to spur corporate and consumer spending.

Unease about the economy's prospects drove investors to snap up defensive stocks seen better able to withstand an uncertain economy, limiting the Dow's losses.

The Dow Jones industrial average .DJI fell 14.28 points, or 0.14 per cent, to 10,318.16. The Standard & Poor's 500 Index .SPX dropped 3.52 points, or 0.32 per cent, to 1,091.38. The Nasdaq Composite Index .IXIC slipped 10.78 points, or 0.50 per cent, to 2,146.04.

For the week, the Dow rose 0.5 per cent, the S&P 500 fell 0.2 per cent and the Nasdaq shed 1 per cent. Trading was choppy with the monthly expiration of November options on Friday.

With the year-end fast approaching, there was also a push by some investors, including hedge funds, to lock in profits from the recent rally going into 2010, analysts said.

Dell, the No. 3 personal computer maker, slid 10 per cent to US$14.29 a day after it reported a sharp drop in third-quarter profit and sales that missed estimates. Dell was the Nasdaq's top drag.

D.R. Horton Inc (DHI.N) tumbled 15.4 per cent to US$10.37 after the homebuilder reported a fourth-quarter loss that was wider than expected and said market conditions were "still challenging.

A rebound in the U.S. dollar pressured prices of global commodities, including crude. Energy stocks were hurt, such as Chevron Corp (CVX.N), which fell 0.7 per cent to US$76.77.

On the New York Mercantile Exchange, December crude settled down 74 cents, or 0.96 per cent, at US$76.72 a barrel, the last day of the contract.

Even so, the Dow's losses were curbed by buying of defensive stocks, or shares of companies seen better able to withstand an uncertain economy. Coca-Cola Co (KO.N) was up 1.1 per cent and drug company Merck & Co (MRK.N) rose 3.2 per cent to US$36.46.

Dow component General Electric Co (GE.N) and Vivendi SA (VIV.PA) were at least US$1 billion apart in their valuation of Vivendi's stake in NBC Universal, the Financial Times reported, dampening hopes of a swift sale.

GE shares shed 1.1 per cent to US$15.59.

Goldman Sachs Group Inc (GS.N) declined 1.6 per cent to US$170.01 after the Wall Street Journal reported large shareholders have asked the investment bank -- on track to award employees the biggest bonuses in its history -- to pass more profits to investors. A Goldman spokesman said major shareholders had not contacted the company about lowering its bonus pool.

The S&P 500 is up 61.3 per cent from the 12-year closing low of March 9, but with Friday's losses the benchmark index broke a two-week winning streak.